Applicability of AS 20 wrt share application money

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Krishna Chaitanya M (Querist)

03 August 2009 Sir,

Is share application money a potential equity share in terms of AS 20 ? Does it need to be taken into account to calculate diluted EPS ?

vrnanda

vrnanda (Expert)

02 September 2009 Hi Chaitanya,

Answer to your query would be Yes.

AS 20 requirement, the share application money could be converted into the equity shares, hence the same would be considered as potential equity shares.

Diluted EPS should be calculated keeping in view as if the conversion took place as at the first day of the year.

Another point to be considered should be the bonus element on conversion, which should be used for arriving at the number of potential shares.

Moreover, the adjustment should be given for the divident declared during the year, thereby arriving at the profit attributable to the shareholders will be calculated.

Regards,
V R Nanda

Krishna Chaitanya M

Krishna Chaitanya M (Querist)

08 September 2009 Thank you

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